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Stock Futures Point to Dow Extending Rebound

stock-futures-point-to-dow-extending-rebound

Stock futures edged higher Wednesday, suggesting major indexes will extend their rebound following a volatile stretch of trading sparked by worries about the spread of coronavirus.

Futures for the S&P 500 ticked up 0.4% a day after the broad market gauge posted its biggest one-day gain since late March. The advance almost unwound the S&P 500’s steep drop from Monday and pushed the index to within 1.5% of its record closing high.

Contracts for the Dow Jones Industrial Average advanced 0.6% Wednesday, suggesting that the blue-chips index will add to its rebound at the open and inch closer to its all-time high. Futures on the technology-focused Nasdaq-100 edged up 0.2%.

Investors are putting concerns about the economic effects of the Delta variant to one side, though markets are expected to remain jittery heading into the peak summer vacation period. A banner start to the corporate earnings season among the biggest U.S. companies is helping buoy sentiment. Many money managers also see few other places to deploy cash with yields on government and corporate bonds trading at depressed levels.

“The market is facing a genuine test: whether the link between case rises and hospitalizations is broken,” said Peter van der Welle, a multiasset strategist at Robeco. Nonetheless, Mr. van der Welle expects a second leg of the reopening trade—in which bond yields, economically sensitive stocks and commodities all rose—to get under way once there is more clarity about the Delta variant.

Johnson & Johnson,

Harley-Davidson,

Coca-Cola

and

Verizon Communications

are among the large companies due to report earnings before the opening bell.

Texas Instruments,

Whirlpool

and Equifax are scheduled to post results after markets close.

Of the 60 S&P 500 constituents that have filed quarterly results, 85% have beaten analysts’ expectations, according to FactSet.

The yield on 10-year Treasury notes ticked up to 1.234% from 1.208% Tuesday. Yields move in the opposite direction to bond prices, and have skidded in recent weeks in a sign of waning concerns about a prolonged overshoot in inflation.

“Consumers are going to remain at least moderately cautious because of the spread of Delta everywhere,” said Christopher Jeffery, head of inflation and rates strategy at Legal & General Investment Management. “It is really hard to think the U.K. template isn’t at least going to be partly followed in the U.S. and Europe,” he added, referring to a spike in cases in the U.K.

Still, Mr. Jeffery is upbeat about the outlook for stocks. “It is hard for us to get structurally negative on equities” given the strong start to earnings season, he said.

In overseas markets, the Stoxx Europe 600 jumped 1.3%, buoyed by shares of travel, leisure and retail companies.

Among individual stocks,

British Airways

owner International Consolidated Airlines Group, airline

EasyJet

and cruise-operator Carnival all gained 5% or more. Next rose 8.9% after the British clothes retailer raised its profit guidance and declared a special dividend.

Japan’s Nikkei 225 rose 0.6% by the close of trading and the Shanghai Composite Index added 0.7%.

Traders worked on the floor of the New York Stock Exchange on Tuesday.



Photo:

Richard Drew/Associated Press

Write to Joe Wallace at [email protected]

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